Mainland European markets are trading firmly in the green, led by the French CAC which has enjoyed a welcome boost off the back of outperformance in the luxury sector.
Improved earnings saw LVMH finally return to growth after a tough period, with the CAC’s biggest company gaining 13% and helping to boost sentiment for fellow luxury names such as Kering (6%) and Hermès (7%).
The upbeat tone was reinforced by Amsterdam listed chip giant ASML, which reported earnings and net bookings ahead of forecasts. While the company cautioned that orders from China are expected to weaken in 2026, markets will take this as the first signal that the AI trade remains healthy in Q3.
In contrast, the FTSE 100 has lagged in early trade, weighed down by renewed fiscal concerns after the chancellor warned of significant tax rises and spending cuts that could go further than required to plug the public finance gap. While such measures may reduce the risk of repeated tax hikes later in her tenure, they also raise fears of fresh pressure on UK growth.
The IMF offered some encouragement with an upgraded 2026 growth forecast of 1.3%, but with inflation restricting Bank of England support, and fiscal tightening on the horizon, the outlook for a meaningful improvement in momentum remains limited.
Gold has pushed to yet another record high as the prolonged US government shutdown continues to dent confidence in the world’s largest economy. Prediction market Kalshi now suggests the stalemate could drag on for 35 days, potentially matching the 2018–19 record already held by Trump.
The longer the impasse runs, the stronger the narrative that the US is no longer the bastion of stability it once was, and in an increasingly polarised global environment, investors continue to gravitate toward assets without regional or political bias. Gold has emerged as that global store of value, free from supply manipulation, and bolstered by steady accumulation from countries like China. The recent US–China tensions serve as a reminder of why diversification into hard assets has become a structural theme for many.
